INTERNATIONAL BUSINESS: Wish You Were Here; Marxist Cuba Beckons, And U.S. Capitalists Champ at the Bit

Last month, two Caterpillar Inc. executives had the kind of face-to-face meeting with a national leader that salesmen dream about -- except the leader was Fidel Castro, and they weren't allowed to sell him anything.

At a dinner the Cuban leader gave in Havana for several American business people, Mr. Castro asked the Caterpillar managers about bulldozers. They told him the largest Cat exceeded 1,000 horsepower. His bushy eyebrows shot up; Cuba's Russian machines are only 100 horse and are notoriously unreliable. ''I can't comprehend'' bulldozers like the ones his guests were describing, Mr. Castro said through an interpreter.

At about the same time, a high-ranking Cuban diplomat traveled to the world headquarters of the Radisson Hotels, a unit of the Carlson Companies, in St. Paul. He assured Peter Blyth, Radisson's president, that three sites eyed by Radisson years ago in Havana and Varadero, a resort on the northern coast, were still available for hotel development. The properties have no claims against them by foreigners forced out of the country after Mr. Castro took power in 1959, he added, and the Cuban Government was eager to do business with Radisson.

These two recent contacts between capitalist America and Communist Cuba represent a small but growing movement by American companies to prepare for the day when doing business with Cuba is not trading with the enemy, as most such transactions are now legally defined. In spite of the 36-year-old United States embargo that prohibits all but a narrow range of commercial activity, and in spite of discouragement by the State Department, American executives are circling the island like Navy gunboats once did, and, in increasing numbers, actually landing.

Cuba's needs are certainly monumental. American executives who have visited Cuba recently estimate the market just for basic goods and services like food, medicine and road repair at $2 billion to $4 billion annually. Mr. Blyth of Radisson Hotels predicts Americans would flood Cuba in the unlikely event that travel restrictions were eased -- driving up the number of annual foreign visitors to 10 million from the current mostly European crop of 1.2 million. Under current law, Americans are free to travel to Cuba, but cannot spend a dime unless they are licensed by the State Department or are the guests of officially designated hosts, like the Cuban Government or some foreign company.

''You could run brake shoes over for '53 Chevys and make a fortune,'' said Rob O'Neill, manager of the Key West, Fla., harbor, who often talks with associates about the money-making opportunities that will open up when the embargo ends.

Before Americans can sign deals, however, Congress must lift the embargo. And that is unlikely to happen as long as Mr. Castro remains in power. ''Castro has to leave, vertically or horizontally,'' said Marc Thiessen, press spokesman for Senator Jesse Helms, the North Carolina Republican who is chairman of the Foreign Relations Committee. Even so, he suggested, Mr. Castro's departure may not be so far off. ''We're so close,'' Mr. Thiessen suggested. ''Castro's revolution is dead.''

Still, with the prospect of the bars coming down to the hemisphere's last forbidden market, an island of 11 million people just 90 miles south of the Florida coast, American business is straining at the leash. ''It's not even controversial in our membership,'' said John Howard, director of international policy for the United States Chamber of Commerce. ''There is a widespread and growing sentiment that our policy toward Cuba makes no sense.''

For now, American business is pretty much limited to advocating a change in American policy, which has been dictated for decades by the mostly anti-Castro Cuban-American community, to slipping through the few fissures that Washington has allowed to develop in the ban, and to keeping up a dialogue with Cubans.

The number of American business representatives traveling to Cuba -- legally, but in most cases without State Department sanction -- has quadrupled to a projected 2,000 this year from 500 in 1994, according to the U.S.-Cuba Trade and Economic Council of New York.

Just last month, a delegation of midlevel officers from major corporations -- including the Mobil Oil Corporation, Texaco Inc., Pharmacia & Upjohn, Bristol-Myers Squibb, Continental Grain, the Case Corporation, a unit of Tenneco, and Caterpillar Inc. -- was the official guest of Mr. Castro and his top ministers in Havana, and a follow-up trade show is proposed in September, said the organizer, Kirby Jones of Alamar Associates. Another trade show for American companies, this one for medical products, is planned within the year by PWN Exhibicon International, based in Connecticut. For the most part, participants in such events describe them as fact-finding tours, though American companies are allowed to take such measures as signing nonbinding letters of intent with Cuban groups or registering trademarks and brand names.

Meantime, President Clinton has widened ever so slightly some small cracks in the trade embargo. On March 20, he announced a measure to expedite shipments of drug and medical equipment, which are already exempt from the ban. At the same time, he authorized the resumption of direct flights to Cuba and of remittances of up to $1,200 by Americans to relatives in Cuba, a measure that should increase sales for the approximately 100 American companies given special dispensation to trade with Cuba.

Those companies do a combined $100-million-a-year business in Cuba -- a drop in the bucket compared with the inroads being made by some of America's trading partners. The Cuban Government reports that companies from 25 countries have committed $2 billion to 340 joint ventures and associations with the Cubans, and have announced other deals worth an additional $4.5 billion.

Canada is the biggest foreign investor, accounting for one-third of the money flowing into the country, followed by Italy, Mexico, Spain, France and the Netherlands. The Sherritt International Corporation of Toronto is reportedly the single most active foreign company, with $800 million committed. The company produces 40 percent of Cuba's oil and is also involved in mining, power generation, cell phones, tourism and agriculture, said Patrice Merrin Best, senior vice president.

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Mr. Castro, one of the world's last avowedly Marxist leaders, has made a series of concessions to the capitalist West since the collapse of the Soviet Union and the end of Moscow's $3-billion-a-year subsidy to his economy. He has liberalized agriculture, allowed tourists to spend dollars, and even invited the Pope for a visit in February. In 1995, his Government created free trade zones and allowed up to 100 percent foreign ownership in many sectors.

This year, the Cuban Government will be host to 250 trade fairs, a turnabout 38 years after Mr. Castro began the nationalization of hundreds of foreign companies that led to the trade embargo. The first property seized, on June 29, 1960, was a Texaco refinery. The rest followed on Aug. 6. President John F. Kennedy imposed the embargo Feb. 7, 1962.

Nearly 6,000 property claims have been certified by the United States; more than half of them, with a 1972 value of $1.8 billion, are held by 30 corporations. Under the Helms-Burton Act of 1996, the embargo can be lifted only after those claims are settled by a democratic government that does not include Fidel or Raul Castro.

Rather than cowing American companies keen on doing business in Cuba, however, that requirement has galvanized them to speak out against the embargo, according to John Kavulich 2d, president of the U.S.-Cuba Trade and Economic Council, a nonprofit business organization that describes itself as nonpartisan. ''Large companies moved from just gathering information about Cuba to finding out what they could do in Cuba today, and then doing it,'' he said.

Even some companies with big compensation claims are cautious about making an issue of them as they eye the Cuban market. Texaco hopes to resolve its demand ''if the opportunity represents itself,'' said Chris Gidez, director of external communications. Meantime, the company sent a member of its Latin American business team to Havana last month to meet with Government officials.

Until now, most American corporations have feared approaching Cuba's shores, even when it was legal. Medical sales, for example, have been allowed for years, but only 40 transactions have been licensed since 1992, and medical companies have given away more than they've sold. Another 10 exploratory licenses have been issued.

Medical companies appear reluctant to jump into Cuba; Eli Lilly & Company said it had no plans to apply for a license as long as the full embargo remained. Part of the reason for their hesitation is the endless paperwork that awaits them. Any pharmaceutical company wishing to exhibit products at the planned trade show by PWN Exhibicon International, for example, must first get a permit from the Federal Government, then a separate license to sell any product, be it an X-ray machine or a box of surgical gloves.

Even more daunting is a prohibition on high-technology exports so broad that it basically includes anything with a microprocessor. ''They think it's going to be put in the nose of a cruise missile and sent back our way,'' said W. Bradford Gary, a board member of the Medical Device Manufacturers Association, who visited Cuba last month. As a result, he said, Cuban doctors wash and re-use surgical gloves and operate 1950's kidney-dialysis machines with no spare parts.

At the moment, the largest licensed transaction with Cuba is AT&T's annual payment of $23 million for access to the Cuban market, part of $66 million in fees from nine long-distance companies. (Most of the long-distance calls that AT&T makes money on originate in the United States.) American airlines pay another $6 million to fly over Cuban air space en route to South America.

Other transactions range from Western Union Moneygrams to three charter flights a week from three Miami charter airlines, which last year were permitted to fly 17,000 journalists, academicians and humanitarians and 43,000 Cuban-Americans home for their once-a-year family visit.

After two American civilian planes were shot down by Cuba in 1996, direct flights to the island were banned, and American visitors had to travel first to Mexico or the Bahamas and board foreign airlines there for the final leg to Havana. President Clinton's reversal of that policy is expected to reduce the round-trip fare to about $300 from $400, while increasing the traffic handled by American charter companies by 50 percent, to 90,000 passengers a year, said Vivian Mannerud. president of the Airline Broker Company.

''Since the Pope's visit, we've seen an increase in visa applications, nearly doubling,'' Ms. Mannerud said. ''People are saying it's time to visit their families, some who have waited 30 years.''